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Shell and ExxonMobil's Groningen future lies on shaky ground

Report summary

A pivotal new chapter has begun at Groningen, Europe's largest gas field. In response to earthquakes in the vicinity of the field in January, the Dutch mining association published its recommendation to the Ministry of Economic Affairs to reduce the annual production cap to 12 bcm by gas year 2021/2022. If implemented, this would reduce annual output by nearly half from the current 21.6 bcm cap. In order to assess the potential impact of this most recent proposal, we evaluate two scenarios for the future of Groningen — the current proposal for a 12 bcm cap, and a worst case shut-in scenario, should seismic activity continue. Both highlight the far-reaching implications, not only for the Dutch upstream industry, but also the European gas market and the stakeholders involved.

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